Majority of UK retirees still saving for the future, with most building up their rainy-day fund as ISA savings continue to heap up among over 65s

Research from Just Group finds that more than half of retirees in the UK are still putting money away in case of a later-life emergency, with significant numbers channelling away savings into low-interest cash ISAs.

While many will dream of retirement as a time to splash out and stop worrying about having to save, the reality is that most retirees are actually still stashing away extra cash, with 51% saying they were continuing to save or invest for the future1.

Of these people, a third (33%) said they were building up a fund in case of an emergency, with more than one in five (22%) saying that the fear of running out of money in retirement was why they were still saving.

Not all were saving as a buffer against life’s downturns however – a quarter (25%) were saving for holidays or other luxury items and 15% were trying to build up an inheritance to pass on when they die.

Stephen Lowe, group communications director at Just Group, believes the figures show that some pensioners may be treading too carefully when it comes to spending in retirement, and urges them to take further guidance to ensure they are not missing out on extra cash or selling themselves short:

“This research indicates that the current cohort of retirees in the UK are a sensible bunch, putting aside money to cope with unforeseen financial shocks like a broken boiler or a failed MOT. It is evident many are thinking carefully about saving as a way to pay for big-ticket items rather than just relying on being able to take it out of their day-to-day income.

“But there’s a sizeable group of retirees who are afraid of running out of money and that’s why they continue to save. This may be a very sensible option as long as they’re not living unnecessarily frugal lives in retirement.

“We want everyone to have a better later life and encourage those thinking about retirement to make use of the government’s free, independent and impartial guidance service Pension Wise. It will help them plan their finances in retirement and give them peace of mind that they’re making the best decision for themselves.”

The research arrives hot on the heels of ISA statistics from HMRC which reveal that over 65s increased their savings in the tax-efficient products over the past year.

6.6 million people over 65 held money in an ISA of some sort through the 2016/17 tax year2, with an average market value of over £47,000, up from £42,500 the previous year.

The figures are indicative of a natural inclination for retirees not only to keep significant amounts of their life savings in cash but also to persevere saving into these products – 1.9 million over 65s put money into a cash ISA in the 2016/17 tax year – according to Stephen Lowe.

“UK retirees continue to be drawn to ISAs, particularly low-risk cash ISAs, when saving. They are fantastic saving vehicles but certainly not the right option for everyone.

“People can access their pension savings at age 55 which is often long before many people will actually retire. The regulator found3 that consumers keeping their savings in cash could get an income from their pot up to 37% higher over a 20-year period by moving it to a mix of assets – so there’s a very good reason for people to seek guidance before making long-term decisions.”